Mandatory Disclosure of Energy Efficiency in Commercial Buildings

22 Jul 2010Archived News Climate Change Matters

With the passing of new mandatory requirements to disclose the energy efficiency of a commercial premises, owners and lessors must ensure the accuracy of the information being disclosed. This, combined with the fact that tenants will place greater value on those facilities with higher energy performance ratings, means that mandatory disclosure under Building Energy Efficiency Disclosure (BEED) will require owners to focus on improvements in the performance of their facilities to maximise the marketability and yield.

The commercial building sector is responsible for approximately 10 per cent of Australia's greenhouse gas emissions. The sector generated around 60 million tonnes of emissions in 2006, growing by more than 80 per cent over the 16 years since 1990. With this in mind, commercial buildings have been recognized as an area of significant focus for State and Federal Government carbon reduction strategies.

Already, even in a voluntary disclosure environment, a number of tenants and purchasers of commercial premises are stipulating minimum performance standards of the space they are to lease or purchase. This is putting pressure on owners to improve performance to maximize the yield of their investments.

From 1 November 2010, the BEED Act will come into effect requiring mandatory disclosure of the energy performance of commercial premises. Together with changes to the Building Code of Australia, the Building Energy Efficiency Disclosure Act is one of the principal means through which the Federal Government will drive emissions reductions in the commercial buildings sector. It is clear that the Federal Government believes that mandatory disclosure requirements are necessary to ensure visibility of the energy performance of commercial buildings and encourage improvements through the implementation of energy efficiency measures.

Under the Building Energy Efficiency Disclosure Act 2010, the Government advises that there will be a transition period for the first twelve months of the Commercial Building Disclosure (CBD) program.

Although the Act commences in July 2010, the energy efficiency disclosure obligation does not commence until 1 November 2010.

From 1 November 2010 to 31 October 2011, the energy efficiency rating required to be disclosed will be a National Australian Built Environment Rating System (NABERS) base or whole building rating.

In order to meet the Act requirements, the Government stipulates that the NABERS Energy rating must:

  • be obtained either before or during the transition period;
  • be a base building or whole building rating;
  • be current (that is, the validity period stated on the NABERS Energy rating must not have expired); and
  • be publicly accessible on the CBD program website.

From 1 November 2011, a full Building Energy Efficiency Certificate (BEEC) will need to be disclosed and must be publicly accessible on the Building Energy Efficiency Register.

The passing of the BEED legislation marks the delivery of a Stage 1 component of the National Framework for Energy Efficiency, a joint initiative of Commonwealth, State and Territory Governments under the Ministerial Council on Energy.

As set out by the Government, the scheme aims: "to ensure that credible and meaningful energy efficiency information is given to prospective purchasers and lessees of large commercial office space. BEED requires owners and lessors of commercial office space with a net lettable area of 2,000 m² or more to disclose the energy efficiency rating to prospective purchasers and tenants when the space is to be sold, leased or subleased."

The Government has designed this scheme to ensure that disclosure of a building's energy efficiency status takes place at the initial stages of negotiations to sell or lease. Furthermore, the advertisement itself should include the energy efficiency rating of the building. A range of penalties will apply for failure to disclose the rating in any advertisements.

To comply, owners and lessors must apply for a Building Energy Efficiency Certificate (BEEC). There are three elements of a BEEC:

1. energy efficiency rating. A premises is assessed according to the protocols set out under the National Australian Built Environment Rating System (NABERS).
2. tenancy lighting assessment. Applicable to lighting that would remain following the transfer of ownership or the tenancy.
3. energy efficiency guidance. This takes the form of general information outlining "common energy efficiency opportunities in commercial office buildings. The material will not be tailored to the individual building and will not be an energy audit. The scheme will not require building owners to undertake a comprehensive energy audit."

Energetics has been working with owners of commercial buildings providing support to improve their energy efficiency and carbon management performance for over twenty five years. Uniquely, we work from strategy development at board and executive level to project identification and implementation on site as well as ongoing monitoring and verification. Our clients acknowledge our expertise in assisting them to realise their goals, and deliver cost reductions.

It is this commitment to provide lasting value for our clients that will ensure that we help you maximize the benefits and opportunities from this new energy efficiency disclosure legislation, whether you are acquiring or disposing of property interests. In the short term we do this through the provision of accurate and timely information and, in the long-term, through providing support in the implementation of improvement strategies.

For our clients' existing properties, Energetics will be able to provide BEEC-compliant documentation that seeks to positively position sales documentation. Where clients are seeking to acquire, Energetics' skills and experience in buildings' energy use and efficiency appraisals can be applied in analysing vendors' BEEC documentation to uncover issues or corroborate performance claims. 

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